It’s a sign of the times that what might normally be seen as a lackluster new home sales report is likely to be warmly received today after an incredibly soft summer — one even softer than initially assumed after today’s large downward revisions to previously reported data. August represents the second-lowest sales level since October of last year, continuing what has been a very sluggish 2018 on net. Home sellers have been firmly in the driver’s seat of the housing market for the past three years, buoyed by strong demand and tight supply. Historically in the face of rising prices, home builders have been quick to ramp up the pace of new construction to meet this demand – but their response has been notably more muted this recovery. But the winds in the housing market have ever-so-slightly begun to shift and home builders may have been the first to pick up on these changes. The new construction pipeline has begun to gum up: Single-family permits and starts began to level off earlier this year. But it was more than builder foresight that prompted these shifts. Construction costs have been steadily rising: Prices for land and labor have been moving upward for some time. More recently prices for lumber, steel and other key construction items including screws, shingles, and air conditioning units have surged higher – collateral damage of ongoing trade disputes. Lumber prices pulled back in August – their largest drop since 2010 – but demand is expected to pick back up this fall as the Carolinas rebuild from the devastation of Hurricane Florence. We should see a spurt of home building in the fall as the recovery gets underway, but we would have to see a very large jump in new home construction beyond the Southeast to avoid posting year-over-year declines in new home sales. For now, the housing market closes the summer on a disappointing note. While it’s still a buyer’s market, there’s an autumn chill in the air. Builders are, perhaps prematurely, bundling up, wary of catching a cold.